MUSLIM ASSOCIATION OF CALGARY

Consolidated Financial Statements of MUSLIM ASSOCIATION OF CALGARY

KPMG LLP 205 5th Avenue SW Suite 3100 Calgary AB T2P 4B9 Telephone (403) 691-8000 Fax (403) 691-8008 www.kpmg.ca INDEPENDENT AUDITORS' REPORT To the Members of the Muslim Association of Calgary We have audited the accompanying consolidated financial statements of the Muslim Association of Calgary, which comprise the consolidated statement of financial position as at December 31, 2016, the consolidated statements of operations, changes in net assets and cash flow for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management's Responsibility for the consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. KPMG Canada provides services to KPMG LLP.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. Basis for Qualified Opinion In common with many charitable organizations, the Muslim Association of Calgary derives revenue from donations and fundraising activities, the completeness of which is not susceptible to satisfactory audit verification. Accordingly, verification of these revenues was limited to the amounts recorded in the records of the Muslim Association of Calgary. Therefore, we were not able to determine whether, as at and for the years ended December 31, 2016 and December 31, 2015, any adjustments might be necessary to cash collection revenues and excess of revenues over expenses reported in the consolidated statements of operations, excess of revenues over expenses reported in the consolidated statements of cash flows and current assets and net assets reported in the consolidated statements of financial position. This caused us to qualify our audit opinion on the financial statements as at and for the year ended December 31, 2015. Qualified Opinion In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Muslim Association of Calgary as at December 31, 2016, and its consolidated results of operations and its consolidated cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. Chartered Professional Accountants December 5, 2017 Calgary, Canada

Consolidated Statements of Financial Position As at December 31, 2016 and 2015 Assets Current assets: Cash and cash equivalents (note 3) $ 2,769,902 $ 2,681,104 Accounts receivable (note 8) 243,538 20,495 Prepaids and deposits 7,500 3,227,230 2,701,599 Property and equipment (note 4) 7,544,018 7,347,749 Liabilities and Net Assets $10,564,958 $10,049,348 Current liabilities: Accounts payable and accrued liabilities (note 8) $ 492,046 $ 10,662 Deferred revenue (note 5) 1,102,475 1,065,865 Deferred capital contributions (note 6) 86,250 89,050 1,188,725 1,154,915 Net assets 8,884,187 8,883,771 Contingencies (note 10) See accompanying notes to consolidation financial statements. Approved on behalf of the Board: $10,564,958 $10,049,348 Director Director

Consolidated Statement of Operations Revenues: Receipted donations (notes 7 and 8) $ 1,343,664 $ 1,539,689 Cash collections 946,609 737,190 Grants 63,390 - Rental income - 21,600 Amortization of deferred capital contributions (note 6) 2,800 3,100 Other - 3,653 2,356,463 2,305,232 Expenses: General and administration 585,816 218,681 Salaries and benefits 505,144 375,479 Rent and condo fees 274,755 202,551 Funeral and cemetery expenses 232,989 130,739 Contribution to charities 215,060 677,012 Events, programs and dinners 214,049 97,528 Repairs and maintenance 167,599 92,974 Amortization 160,635 157,127 2,356,047 1,952,091 Excess of revenues over expenses $ 416 $ 353,141 See accompanying notes to consolidated financial statements.

Consolidated Statements of Changes in Net Assets Balance, beginning of year $ 8,883,771 $ 8,463,108 Excess of revenues over expenses 416 353,141 Contribution received for land (note 5) - 67,522 Balance, end of year $ 8,884,187 $ 8,883,771 See accompanying notes to consolidated financial statements.

Consolidated Statements of Cash Flow Cash provided by (used in): Operations Excess of revenues over expenses $ 416 $ 353,141 Item not involving cash: Amortization of property and equipment 160,635 157,127 Amortization of deferred capital contributions (2,800) (3,100) 158,251 507,168 Change in non-cash operating working capital: Accounts receivable (223,043) (12,200) Prepaids and deposits (7,500) - Accounts payable and accrued liabilities 481,384 (209,554) Deferred revenue 36,610 70,779 445,702 356,193 Investing: Purchase of property and equipment (356,904) (690,961) Contributions received for land - 67,522 (356,904) (623,439) Increase (decrease) in cash 88,798 (267,246) Cash, beginning of year 2,681,104 2,948,350 Cash, end of year $ 2,769,902 $ 2,681,104 See accompanying notes to consolidated financial statements.

Notes to Consolidated Financial Statements 1. Purpose of the organization: The Muslim Association of Calgary (the Association ) is a non-profit organization which was established on May 25, 1961 under the Religious Societies Lands Act in the Province of Alberta, to serve and empower the Muslim community of Calgary through the delivery of services, activities and programs in accordance with the established principles of Islam in the light of the Quran and Sunnah. The Association organizes prayers for the community, contributes to youth programs and summer activities, conducts research and provides information for the general public, as well as consulting services and general guidance. The Association also has a cemetery, which was purchased to serve the Muslim community. The Muslim Council of Calgary (the Council ) is an elected body representing the majority of Muslims and handling all their affairs in the city of Calgary. The Council is a non-governmental organization and the guiding body for the Association as well as the Muslim Community Foundation of Calgary (the Foundation ), a related entity to the Association. The Foundation is related to the Association by virtue of common management by the Council. The Association is a registered charity under the Income Tax Act. Consequently, the Association is not taxable and is authorized to issue charitable donation receipts for income tax purposes. The Association operates five centers, a weekend school in the Northwest (the Northwest School ) and a Muslim cemetery (the Cemetery ) within Calgary and the surrounding areas. The five centers are the Southwest Mosque, the Downtown Center, the Brooks Centre, the Islamic Association of Northwest Calgary (the Northwest Center ) and the Islamic Centre of South Calgary (the Southeast Center ). The operations of the Cemetery and the Downtown Center are managed and overseen by the Southwest Mosque. The Northwest Center is a separate legal entity that established a memorandum of understanding agreement with the Association. Operations of the Northwest Center are accounted for as a controlled organization and are consolidated in the financial statements of the Association. The Northwest School is a weekend school that provides Islamic education and learning for children and operates at the Northwest Center. The Southeast Center is a separate legal entity that established a memorandum of understanding agreement with the Association. Operations of the Southeast Center are accounted for as a controlled organization and are consolidated in the financial statements of the Association.

Notes to Consolidated Financial Statements, page 2 2. Significant accounting policies: The consolidated financial statements have been prepared by management in accordance with Canadian Accounting Standards for Not-For-Profit Organizations in Part III of the CPA Handbook. (a) Presentation and disclosure of controlled not-for-profit organizations: The Association consolidates the operations of the Northwest Center, the Southeast Center and We Care, all of which are controlled not-for-profit organizations, of the Association. (b) Cash and cash equivalents: Cash and cash equivalents include cash on hand and short-term deposits which are highly liquid with original maturities of less than three months. (c) Revenue recognition: The Association follows the deferral method of accounting for contributions. Contributions subject to externally imposed restrictions are recorded as deferred revenue and recognized as revenue in the year in which the related expenses are incurred. Contributions received which do not have any externally imposed restrictions as to use, are reported as income in the year in which they are received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Contributions received subject to externally imposed stipulations whereby funds are to be spent on the acquisition of non-depreciable assets are recognized as a direct increase in net assets. (d) Contributed services: Volunteers contribute their time to assist the Association in carrying out its services. Because of the difficulty in determining fair value, contributed services are not recognized in the consolidated financial statements. (e) Donated materials and services: Certain goods and services are received from the community without cost to the Association. These are recognized in the consolidated financial statements at the estimated fair value, if reasonably determinable, only to the extent that they would normally be purchased.

Notes to Consolidated Financial Statements, page 3 2. Significant accounting policies (continued): (f) Property and equipment: Purchased property and equipment are recorded at cost. Contributed property and equipment are recorded at fair market value at the date of contribution. Amortization is provided on a straight line balance basis over the assets estimated useful lives as follows: Buildings Building improvements Equipment Websites Vehicles Landscaping Cemetery 40 years 5 years 5 years 3 years 5 years 15 years In the year of acquisition, amortization is half of the annual amount. (g) Impairment of long-lived assets: Long-lived assets, including property and equipment subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by a comparison of the asset s carrying amount to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. When quoted market prices are not available, the Association uses the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset as an estimate of fair value. (h) Measurement uncertainty: The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses. Such estimates include providing for amortization of property and equipment. Actual results could differ from these estimates. (i) Financial instruments: Financial instruments are recorded at fair value on initial recognition. Freestanding derivative instruments that are not in a qualifying hedging relationship and equity instruments that are quoted in an active market are subsequently measured at fair value, with changes in fair value recorded in net income. All other financial instruments are subsequently recorded at cost or amortized cost, unless management has elected to carry the instruments at fair value.

Notes to Consolidated Financial Statements, page 4 2. Significant accounting policies (continued): (i) Financial instruments (continued): Transaction costs incurred on the acquisition of financial instruments measured subsequently at fair value are expensed as incurred. All other financial instruments are adjusted by transaction costs incurred on acquisition and financing costs, which are amortized using the effective interest rate method. Financial assets are assessed for impairment on an annual basis at the end of the fiscal year if there are indicators of impairment. If there is an indicator of impairment, the Association determines if there is a significant adverse change in the expected amount or timing of future cash flows from the financial asset. If there is a significant adverse change in the expected cash flows, the carrying value of the financial asset is reduced to the highest of the present value of the expected cash flows, the amount that could be realized from selling the financial asset or the amount the Association expects to realize by exercising its right to any collateral. If events and circumstances reverse in a future period, an impairment loss will be reversed to the extent of the improvement, not exceeding the initial carrying value. 3. Cash and cash equivalents: Cash and cash equivalents include a Guaranteed Investment Certificate ( GIC ) with a face value of $nil (2015 - $5,000). The GIC earned interest at a rate of 0.65% per annum.

Notes to Consolidated Financial Statements, page 5 4. Property and equipment: Land $ 4,298,588 $ 4,298,588 Buildings: Cost 3,804,234 3,804,234 Accumulated amortization (1,400,474) (1,301,114) Net book value 2,403,760 2,503,120 Landscaping - Cemetery: Cost 616,514 611,727 Accumulated amortization (158,683) (117,741) Net book value 457,831 493,986 Websites: Cost 36,402 36,402 Accumulated amortization (36,402) (36,402) Net book value Equipment: Cost 67,931 59,775 Accumulated amortization (59,878) (59,775) Net book value 8,053 Building improvements: Cost 395,939 51,975 Accumulated amortization (25,988) (15,592) Net book value 369,951 36,383 Vehicles: Cost 74,945 74,945 Accumulated amortization (69,110) (59,273) Net book value 5,835 15,672 Property and equipment, net book value $ 7,544,018 $ 7,347,749

Notes to Consolidated Financial Statements, page 6 5. Deferred revenue: Deferred contributions represent money received in advance of unspent resources subject to externally imposed restrictions requiring that funds be used for specific projects. Balance, beginning of year $ 1,065,865 $ 995,086 Contributions received in the year 100,000 620,585 Amounts recognized as revenue in the year (63,390) (482,284) Amounts transferred to contributions for land (67,522) Balance, end of year $ 1,102,475 $ 1,065,865 6. Deferred capital contributions: Deferred capital contributions represent the unamortized amount of donations received for building improvements. The amortization of capital contributions is recorded as revenue in the statement of operations. Balance, beginning of year $ 89,050 $ 92,150 Capital assets purchased with restricted contributions provided by donors Amortization of deferred capital contributions (2,800) (3,100) Balance, end of year $ 86,250 $ 89,050 7. Donations in kind: Included in receipted donations for the year ended December 31, 2016 are donations in kind of $514 (2015 - $12,461). 8. Related party transactions: Included in accounts receivable at December 31, 2016 is an amount receivable from the Foundation of $42,772 (2015 - $nil) relating to operational expenses incurred by the Association on behalf of the Foundation as well as an amount receivable from a member of the Board of $ nil (2015 - $8,295). Included in accounts payable and accrued liabilities at December 31, 2016 is an amount owing to the Foundation of $nil (2015 - $4,572). For the year ended December 31, 2016, contributions of $9,500 (2015 - $7,610) were received from members of the Board of Directors of the Council, the governing body of the Association. The above transactions were in the normal course of operations and were measured at the exchange amount, being the amount established and agreed to by the related parties.

Notes to Consolidated Financial Statements, page 7 9. Financial Instruments and related risks: The Association s financial instruments consist of cash, accounts receivable and accounts payable and accrued liabilities. The fair values of these financial instruments approximate their carrying value due to their short term nature, except for term deposits whose interest rates are comparable to market rates. (a) Credit risk: Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss. The Association does not believe it is subject to any significant concentration of credit risk. Cash is in place with major financial institutions. (b) Liquidity risk: Liquidity risk is the risk that the Association will be unable to fulfill its obligations on a timely basis or at a reasonable cost. The Association does not believe it is subject to any significant concentration of liquidity risk. The Association manages its liquidity risk by monitoring its operating requirements. The Association is not exposed to significant foreign currency or interest rate risks. 10. Contingencies: The Association is subject to claims and contingencies related to lawsuits arising in the normal course of operations. Management believes the ultimate liability, if any, arising from such claims or contingencies, is not likely to have a material adverse effect on the Association s results of operations or financial condition.

Notes to Consolidated Financial Statements, page 8 11. Statement of operations Southwest Mosque: Included in the financials of Southwest Mosque are the operational results of the Downtown Center and the Cemetery. Revenue: Receipted donations $ 593,066 $ 981,483 Cash collections 691,001 426,938 Grant revenues 63,390 Amortization of deferred capital contributions 300 600 Other revenues 3,653 1,347,757 1,412,674 Expenses: Salaries and benefits 333,914 182,480 Amortization 101,198 94,392 Contribution to charities 186,073 615,011 Events, programs and dinners 101,471 22,246 Repairs, maintenance and security 89,906 14,263 General and administration 368,195 152,157 Funeral and cemetery expenses 232,989 130,739 Rent 83,915 104,656 1,497,661 1,315,944 (Deficiency) excess of revenues over expenses $ (149,904) $ 96,730 The Southwest Mosque pays a portion of salaries and benefits for Northwest Center, Northwest School, Southeast Center and Brooks Center. These have been allocated and disclosed under the salaries and benefits within the statement of operations of the respective centers, included in Notes 12 to 15.

Notes to Consolidated Financial Statements, page 9 12. Statement of operations Northwest Center: Revenue: Receipted donations $ 432,083 $ 230,451 Cash collections 91,335 132,228 Amortization of deferred capital contributions 2,500 2,500 525,918 365,179 Expenses: Salaries and benefits 2 91,925 115,500 Amortization 37,672 47,083 Contribution to charities 18,987 30,590 Events, programs and dinners 77,208 41,045 Repairs, maintenance and security 63,360 60,413 General and administration 1 112,940 21,090 Rent and condo fees 108,318 50,014 510,410 365,735 Excess (deficiency) of revenues over expenses $ 15,508 $ (556) 1 Included in general and administration expenses are expenses related to land acquired in the Northwest which include utilities and bank fees. For the year ended December 31, 2016, these totaled $nil (2015 - $6.792). 2 Included in salaries and benefits expenses for the year ended December 31, 2016 is $ nil (2015 - $70,000) of employee expenses paid for by the Southwest Mosque.

Notes to Consolidated Financial Statements, page 10 13. Statement of operations Northwest School: Revenue: Receipted donations $ 58,375 $ 54,605 Cash collections 1,091 272 59,466 54,877 Expenses: Salaries and benefits 39,348 36,782 Amortization 103 867 Events, programs and dinners 1,719 3,235 Repairs, maintenance and security 1,029 General and administration 30,997 17,779 Rent 5,956 79,152 58,663 Deficiency of revenues over expenses $ (19,686) $ (3,786) 14. Statement of operations Southeast Center: Revenue: Receipted donations $ 206,300 $ 219,840 Cash collections 109,329 123,836 Rental Income 21,600 315,629 365,276 Expenses: Salaries and wages 20,231 - Amortization 1,181 - Contribution to charities 10,000 31,411 Events, programs and dinners 33,651 31,002 Repairs, maintenance and security 13,304 18,298 General and administration 50,673 18,161 Rent 76,566 47,880 205,606 146,752 Excess of revenues over expenses $ 110,023 $ 218,524

Notes to Consolidated Financial Statements, page 11 15. Statement of operations Brooks Center: Revenue: Receipted donations $ 53,840 $ 53,310 Cash collections 53,853 53,916 107,693 107,226 Expenses: Salaries and benefits 1 19,726 30,000 Amortization 20,481 14,185 General and administration 23,011 9,454 63,218 53,639 Excess of revenues over expenses $ 44,475 $ 53,587 1 Included in salaries and benefits expenses for the year ended December 31, 2016 is $ nil (2015 - $30,000) of employee expenses paid for by the Southwest Mosque.